Friday, February 10, 2012

"Europe is poor so should live within its means"

I found this article interesting, compact and sharp.
Just thought it'll be good to share it here :)

by By Justin Rowlatt
Presenter, Business Daily, BBC World Service
[source]

For decades the West has lectured the East on how to manage its economies. Not any more.

Now the emerging economies of Asia look like models of steady, consistent policy and sustained growth while Europe, America and Japan are mired in debt and are growing achingly slowly, if at all.

So what can the West learn from the East?

According to former Malaysian Prime Minister Mahathir Mohamad, the message is simple but devastating: Europe must face up to the new economic reality.

"Europe... has lost a lot of money and therefore you must be poor now relative to the past," he reasons in an interview with BBC World Service's Business Daily.

"And in Asia we live within our means. So when we are poor, we live as poor people. I think that is a lesson that Europe can learn from Asia."

State of denial

Dr Mahathir is well qualified to pass judgement.

If any Asian leader can make claim to having laid the groundwork for his country's economic expansion, it is he.

During his two decades in power, Dr Mahathir helped transform Malaysia from a sleepy former colony into an economic tiger.

But his advice will not make happy reading in the capitals of Europe.

Dr Mahathir believes European leaders are in a state of denial.

"You refuse to acknowledge you have lost money and therefore you are poor," he says.

"And you can't remedy that by printing money. Money is not something you just print. It must be backed by something, either good economy or gold."

Dr Mahathir may be 86 years old, but he still holds very strong views.

In particular, he believes Europe and the West must begin the long slow process of restructuring their economies to reduce their dependence on the financial sector.

"I think you should go back to doing what I call real business - producing goods, providing services, trading - not just moving figures in bank books, which is what you are doing."

His big bugbear is still currency trading, which he believes did huge damage to the Malaysian economy during the financial crisis that hit Asia in the late 1990s.

"Currency is not a commodity", he says.

"You sell coffee. Coffee… can be ground and made into a cup of coffee.

"But currency, you cannot grind it and make it into anything. It is just figures in the books of the banks and you can trade with figures in the books of banks only.

"There must be something solid to trade, then you can legitimately make money."

Tough message

But even if Europe takes his advice, Dr Mahathir believes there will be no quick return to economic health.

"To recover your wealth you have to work over many years to rebuild your capacities, to produce goods and services to sell to the world, to compete with the eastern countries," he says.

European workers are overpaid and unproductive, Dr Mahathir believes.

"I think you have paid your workers far too much money for much less work," he says.

"So you cannot expect to live at this level of wealth when you are not producing anything that is marketable."

His message is tough, he acknowledges, before adding with a laugh: "We used to get tough messages from you before, remember?"

"And now, what is the result? Sometimes you undermined our currency and we became very poor. Well, we learn from each other. We were Euro-centric before. I think it should be a little bit Asia-centric now."

A tough message indeed.

________________________________________________________

"I think you should go back to doing what I call real business - producing goods, providing services, trading - not just moving figures in bank books, which is what you are doing."

What a slap!

European workers are overpaid and unproductive, Dr Mahathir believes.
"I think you have paid your workers far too much money for much less work," he says.

I second that. Heh... Typical Asian salesgirls work 10am to 10pm, 7 days a week. Whoever is willing to work during public and festive holidays will get higher pay. In UK, EVERYTHING is closed on Christmas day. Yes, people have more "worker's right" but still....

6 comments:

Malaysia is using the same false riba based economic system that Europe did. It's just that Asia is enjoying the early "boom" part (as Europe did previously) of that fake system.

There is very little difference between it. Having a 1% fractional reserve or a 10% fractional reserve is meaningless - it's like two bald men fighting over a comb.Eventually the Asian debt will grow too large. Unable to mask it or sweep it under the carpet, the Asian economy will be just as bad as the European economy.

That an employer will only pay a salesgirl Ringgit Malaysia 800 for in effect her entire waking life, isn't something one should be proud of. Hardly a boasting point in my eyes. It's slave labour.

People should be paid a decent wage. In the UK there are indeed people who are overpaid, many managers, bankers, company heads, politicians etc. These peoples have very questionably output in consideration of their salary. Generally, the decent 'shop floor' workers do work well, and would I'm sure do a decent job in response for decent pay.

Ooops, sorry. I don't really know of the economic development / performance of Malaysia. The issue that really striked me and made me proud in this article is the fact that Dr M slammed the western countries, right on their faces.

Western countries have always regarded themselves as the centre of the world. Thus to be embarassed like this by an Asian leader is somewhat something I look forward to.

Having said that, I am concerned however with how the current govt is spending Malaysian money. It does sound scary, and as a citizen, I started to feel insecure.

re RM800 of salary.Well, that's not really true actually.I worked as a part time salesgirl.The basic pay for a full time worker is RM800+, 10am to 6pm or 1pm to 10pm. They'll be paid RM3 per one hour of overtime on normal days and double or triple on public hols.

Hence their salary might just reach RM1200.And that was 6 yrs back.

Nowadays, salesgirls are paid RM4 -RM7 an hour depending on the company they work for. I think McD offers RM5 an hour. The salary is getting higher, but I hv to admit things are getting more expensive too.And even harder to admit, the buying power of UK people is higher than that of Malaysians.

National debt good if used right, says BNMBy Yow Hong ChiehMarch 22, 2012

KUALA LUMPUR, March 22 — Public debt levels should not be a concern despite being one of the highest in Asia as long as the borrowings are used wisely, the central bank’s assistant governor said today.

Dr Sukhdave Singh said the focus should not be on the government’s debt-to-GDP ratio but whether Putrajaya was using its loan to build up the country’s productive capacity.

He pointed out that it was “not good” for governments to refrain from borrowing if it meant important developmental work could not be carried out — and worse yet if things remained the same even after a loan was taken out.

“The key point is when we pass this debt to future generations what else are we passing to them,” Sukhdave stressed.

Malaysia’s government debt in 2011 was 53.8 per cent of GDP — the second highest in Asia after India — close to the 55 per cent debt-to-GDP limit set by law.

The opposition has alleged, however, that national debt has reached 65.2 per cent of GDP, pointing to RM96.6 billion in “off-balance sheet” loans which Putrajaya has guaranteed as public debt.

On Tuesday, Tun Dr Mahathir Mohamad cautioned that a big hike in public sector pay would mean a smaller allocation for the nation’s basic developmental needs, which could force government to borrow more.